46 LEGAL IMPACTS OF COVID-19 IN THE TOURISM INDUSTRY them, but they also have to have major impact. Previously, events like 9/1141, a volcano eruption42 or a major industrial accident43 were recognised as such exceptional occurrences. Obviously, the Commission has accepted the outbreak of the COVID-19 pandemic as an exceptional occurrence that no one could be prepared for and that had far-reaching consequences on the normal functioning of the market44. However, as Chapter 5 below will show, the Commission’s decisional practice got tighter throughout the months of the pandemic. The second condition requires a direct causal link between the exceptional occurrence and the damage suffered. Even though the measures providing compensation for the damages of exceptional occurrences “shall be” compatible with the internal market, it is still an exemption from the general ban of granting State aid under Article 107 (1) TFEU. Thus, the jurisprudence applies a strict approach here45. The direct causal link is much more than a simple consequence. The damage has to be closely linked to the occurrence, in the present case the pandemic and the curfew, sanitary or quarantine measures trying to limit the impact and the further spread of it. The change in clients’ behaviour, e.g. not flying during the holiday period even if it is not forbidden, is not sufficient to prove the direct causal link46. A good example for the direct causal link are damages suffered due to forbidding the operation of flights to and from certain States, closing borders, forbidding to hold events above a set number of participants, obliging citizens (employees) to stay at home or similar lockdowns. The third condition is about how to quantify the damage suffered. Obviously, the compensation cannot go beyond the amount of damages, otherwise it would result in undue advantage, which is incompatible with the internal market. Therefore, Member States are required to present their calculation methodology in the notification. Using the terminology of the civil law’s extracontractual liability, both the incurred expenses (damnum emergens) and the foregone revenue (lucrum cessans) can be covered. The whole calculation is about avoiding 41 See Communication from the Commission to the European Parliament and the Council - The repercussions of the terrorist attacks in the United States on the air transport industry (COM/2001/0574 final), especially paragraph. 33. 42 Case SA.32163 – 2010/N - Slovenia – Rectification of consequences of the damage caused to air carriers and airports by earthquake activity in Iceland and the resulting volcano ash in April 2010. 43 Case SA.33487 (2011/N) Agricultural and fisheries aid to compensate for damage due to exceptional occurrence (“red sludge aluminium accident”). 44 These specifications mainly require that an exceptional occurrence that has to be something that usually cannot be covered with insurance products available on the market. For this reason any returns from insurances or litigations, arbitration for these damages has to be disregarded when calculation the amount of the aid. 45 See the judgment in case T-268/06 Olympiaki Aeroporia Ypiresies v Commission, paragraph 46. 46 Nevertheless, State aid still can be compatible in these cases under Article 107 (3)(b) TFEU.
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